‘RP not likely to slip into recession’

MANILA, Philippines – The Joint Foreign Chambers of the Philippines (JFC) is not expecting the economy to slip into a recession this year, thanks to the country’s strong remittance inflows and revenues from the information technology (IT) services sector.

In a report released yesterday, the seven-member chamber said money sent home by overseas Filipino workers (OFW) and revenues from the IT-enabled services sector will support the continued growth of domestic consumption, allowing the Philippines to show positive gross domestic product (GDP) growth in 2009.

“There is a chance of mild recession should global recovery be slow and remittance and service revenue flows deteriorate more than expected. But this seems unlikely,” the report said.

“The archipelago is the leader in East Asia in the deployment of overseas workers and in the IT-enabled services sector,” it added. Last month, consulting firm Ovum Plc. said government initiatives for technology adoption will drive the growth of the country’s IT sector.

OFW remittances hit a record $1.47 billion in March from $1.3 billion recorded in the previous month. Its growth rate, however, slowed to 3.04 percent as traditionally strong remittance sources, such as the United States and the Middle East, contracted or were flat.

For the full year, the Bangko Sentral ng Pilipinas (BSP) is expecting a flat growth in remittances, while the International Monetary Fund (IMF) projected a 7.1-percent decline. However, JFC said the growth of remittance inflows remain positive for the first three months of the year at 2.6 percent.

“We expect remittances to return gradually over several years to 2008 volumes and to grow in rough proportion to global economic recovery,” JFC said. Last year, remittances increased 14 percent to $16.4 billion, accounting for 10 percent of GDP.

Meanwhile, JFC said the upcoming national elections will also boost the country’s GDP by less than one percent.

“Election spending should have a booster shot effect on GDP. But any recurrence of serious political intability could be a negative tipping point. Such risks require vigilance and avoidance of complacency,” the report said.

JFC’s position in the report remain unchanged even as the National Statistics Coordination Board (NSCB) reported a 0.4-percent GDP growth for the first three months of the year, the lowest since the Asian financial crisis.

The latest figure was much worse than the government’s 1.8 to 2.8 percent quarterly projection. But while the country is still posting positive growths, NSCB Secretary General Romulo Virola said the Philippines is already on “the brink of recession” not just based on GDP rates but on worrisome May to June leading economic indicatores.

The indicators include the consumer price index, electricity consumption, exchange rate, hotel occupancy rate, money supply, number of new business incorporations, stock price index, terms of trade index, total imports, tourist arrivals and wholesale price index. –Ma. Elisa P. Osorio, Philippine Star